Doug Cameron (NSW, Australian Labor Party, Shadow Minister for Human Services) Share this | Hansard source

I rise to speak on the Treasury Laws Amendment (Personal Income Tax Plan) Bill 2018. Put simply, the Turnbull government's income tax plan presented in this bill is fundamentally flawed as economic budgetary and social policy. It will fail to deliver for the Australian community in four key ways. Firstly, it is reckless with our nation's finances and is yet another example of the fiscal irresponsibility that has characterised this government and the previous Liberal governments of John Howard and Peter Costello. Secondly, it will actively undermine the progressivity and therefore fairness of our income tax system. This will weaken the foundations of future inclusive growth and increase intergenerational inequality. Thirdly, it will severely diminish the capacity of future governments to support Australian jobs and to make vital investments in areas such as health and education. Finally, it will hamper our ability to respond in the event of an economic shock overseas or a broader economic downturn.

Labor recognise that, as a society, we are confronted by a series of very real economic challenges that ought to be the top priority for any government. That's why it's important to consider this tax package in the context of the broader economic challenges we are facing—particularly inequality, which is the biggest threat to our economy and our cohesion as a society. We're experiencing a rapid rise in inequality in both wealth and income that's unprecedented in the modern history of our country. We're in the midst of a prolonged period of depressed wage growth. Australian workers are currently experiencing the lowest wage growth in 30 years. Indeed, many ordinary working people have been denied a pay rise in real terms for years and have seen their living standards decline. The coalition has certainly played its part in that outcome, with industrial legislation that has consistently attacked the ability of unions and workers to bargain for improved conditions and wages.

Homeownership rates for young Australians have collapsed to their lowest level in the past 30 years. Fewer than 40 per cent now own their own home, compared with 60 per cent just a generation ago. This has significant ramifications for intergenerational equity. Perhaps the starkest indication of our increasing inequality is that, over the past 30 years, the top one per cent of income earners in this country have doubled their share of income. Yet, at the opposite end of the income scale, the proportion of Australian workers who rely on the minimum wage has risen to a record high of 22.7 per cent, increasing by 3.9 percentage points in just the two years between 2014 and 2016.

These are just a few of the issues that we, as a nation and a parliament, must confront. Taken separately, they are serious and difficult public policy challenges worthy on their own merits of the parliament's urgent attention. But, when taken together, they are something altogether much more serious. That's because, without prompt and meaningful action by government, these issues pose an existential threat to the most quintessentially Australian promise of a fair go. Left unaddressed, these issues threaten to permanently entrench intergenerational inequity in this country, and it's something we should not countenance. Given the severity of the inequality challenge we are facing, it's fair to ask, 'Are these the issues that the Turnbull government is addressing with its economic policy and in this bill?'

Regrettably, the answer is a definitive no—and that's exposed by even a cursory examination of the detail of the government's income tax plan.

Australia has a long tradition of progressive taxation that aims to ensure that those with the greater ability to pay are the ones who contribute a larger share of all personal income tax revenue, yet the plan announced by Treasurer Morrison on budget night in May would constitute a radical and regressive refashioning of our income tax system over the course of the next seven years. Professor Miranda Stewart agreed in her evidence to the Senate economics committee inquiry into this bill that this tax package was 'both inefficient and a retrograde step and that that undermines 100 years of progressive income tax rate structure in Australia.'

While the first stage of the government's proposed changes would provide modest but inadequate tax relief for low- and middle-income earners, it is stages 2 and 3 of this package that are the most consequential. Funnily enough, this happens to be the element of the tax plan that this government doesn't want the Australian people to pay attention to—neither who will benefit the most nor how much it will cost.

Should the Turnbull government be successful in passing this legislation, the upper threshold for the 32.5 per cent tax bracket would rise dramatically from $90,000 to $200,000. Along with this change, the existing 37 per cent tax bracket would be totally abolished. What this really means is that Prime Minister Malcolm Turnbull and Treasurer Scott Morrison believe it's fair and appropriate for someone earning $200,000 a year to pay the same income tax rate as a worker on $40,000 a year.

Analysis conducted by the Australia Institute has exposed the deep unfairness of the government's package. It found that, if fully implemented, in 2024-25 the benefits of the proposed tax cuts will go overwhelmingly to the highest income earners. The Australia Institute's research has revealed that removing the 37 per cent tax bracket in 2024-25 would see 80 per cent of the benefit flow through to the top 20 per cent of income earners in this country. Sixty per cent of taxpayers—those on the lowest incomes—would receive no benefit from this tax cut. In a broader sense, the government proposal would see middle-income earners shoulder a greater share of tax overall. That was the finding of the Grattan Institute, which in its submission to the Senate inquiry, confirmed that the full package would decrease the tax burden on high-income earners while increasing the tax burden on middle-income earners.

Most telling is what all this means in dollar terms. Members of parliament on salaries in excess of $200,000 a year stand to benefit by as much as $7,225 a year in 2024-25, yet the hardworking cleaners, security guards and hospitality workers who we share this building with stand to receive just a little over $540. Those are the very same cleaners who have not received a pay rise from this government for six years and are still fighting for a fair go from this terrible government.

Frankly, it shouldn't surprise us that those on the other side of the chamber think that that's fair. We've already seen in the media this week a government senator claiming that a $200,000 salary isn't a lot of money. They're completely and utterly out of touch with the Australian people. But that's this government's agenda. That's what this government thinks is fair. And it's even more unfair when you consider how they'll pay for it. The fact of the matter is that someone will have to pay for the government's unprecedented largesse in providing income tax cuts for the wealthiest individuals and for their $80 billion corporate tax giveaway, including $17 billion to the banks. Someone will have to pay for this.

Those who will pay for this stupid economic incompetence were revealed again in the government's 2018-19 budget. It will be the same working- and middle-class Australians who have borne the brunt of the coalition's attacks against them since this government was elected in 2013. It will be young Australians pushed off Newstart and onto youth allowance, resulting in a cut of around $48 a week, or almost $2,500 a year. So the most vulnerable young people in the community get a cut of $2,500 a year, and the rich and powerful in this country get thousands of dollars in tax cuts. That is totally inequitable, totally unfair. It will also be the 70,000 new mums and families worse off due to cuts to paid parental leave. It will be the carers, pensioners and people with disabilities, who stand to lose a billion dollars of vital support with the scrapping of the energy supplement. So pensioners, the vulnerable, get hammered by this government and the top end of town walk away with their wallets bulging. It will be those Australians who are reliant on life-saving medications. They will be slugged an extra $5 for each prescription. It will be hardworking older Australians seeing their retirements pushed out to the age of 70—the oldest pension age in the developed world.

I could continue for the rest of my allotted speaking time listing those Australians who will suffer, those who will be made to pay by this government. They are always the ones this out-of-touch government makes pay. Middle-class Australians, working-class Australians and the poorest in our community are always targeted by this coalition. They're the ones who are targeted. As Senator Wong so succinctly put it in her contribution to the corporate tax debate in this chamber, on every occasion the Liberal and National parties have had a choice:

They choose big business over middle- and working-class Australians and they choose multinationals over Medicare.

It is not the choice that Labor has made. Labor wants to ensure that a future government can properly fund public services such as health, education and infrastructure, while recognising that low- and middle-income households are under pressure.

In contrast to the government, a Shorten Labor government will deliver permanent tax relief for the Australians who need it most, prioritising that tax relief going into the back pockets of middle-income and working-class Australians. As a matter of principle, Labor do not support someone on $200,000 paying the same tax rate as someone on $40,000. This is reflected in the amendments that we will be putting forward. We also cannot agree to the elements of the government's plan that will provide even more tax cuts for the highest-earning individuals in the top tax bracket, noting that the coalition already cut their tax rate last year. The plan Labor have put forward is a far fairer and more fiscally responsible package than the government's. Under Labor's plan, working and middle-class Australians will pay less tax. In fact, everyone earning less than $125,000 a year will receive a bigger tax cut under Labor compared to that under the Liberals. More than four million people will be better off by $398 a year with Labor's tax refund compared to that of the Liberals. With our refund, a teacher on $65,000 will receive a tax cut of $928 a year. A couple earning $90,000 and $50,000 respectively will receive a tax cut of $1,855 a year.

Under Labor's proposal, people living in my duty electorate of Banks, including suburbs like Mortdale, East Hills, Peakhurst and Revesby, will see 74 per cent, or 67,000 people, better off. In Tasmania, 76 per cent, or 39,000 people, in the electorate of Braddon will be better off. The choice is clear in that upcoming by-election. You can vote for Justine Keay, and 76 per cent of the electorate will benefit more. It's a similar story in the Queensland electorate of Longman. Voters can support Labor's Susan Lamb, and 75 per cent, or 69,000 people, will be better off. It's the same right around the country.

Labor's plan recognises that low- and middle-income households are more likely to spend any additional income they receive. Our targeted tax cuts will put more money back in the hands of Australian families who will support future growth. This will provide a much stronger foundation for demand than the government's poorly targeted proposals that overwhelmingly favour those on high incomes. These are targeted and paid for and will deliver a bigger stimulus to consumption while not risking the medium-term budget position and important investments in our hospitals and schools.

We have indicated publicly today that we will support tax cuts for 10 million people on 1 July. But we will go further. We have committed that, if we are elected, we will almost double these tax cuts and make them permanent, while asking those in the top tax bracket to pay a little more to help reduce the debt.

The onus now is on the government to stop playing political brinkmanship about not being willing to split the bill and accept our sensible amendments. By continuing to insist that the bill be taken as a whole and yet refusing to release even basic fiscal and distributional impacts, this government is treating the Australian public and the Senate crossbench as fools.

Labor has a very different set of priorities to this government, and that absolutely includes dealing with inequality in this country, not undermining our progressive tax system. It's for this reason that we cannot support unsustainable levels of tax cuts that put essential public services at risk. We want a fair go for all Australians, not just the top end of town. We want to ensure that we can make the necessary investments in vital issues for our future, including areas such as health, education, housing and homelessness, skills, apprenticeship and TAFE. Labor has spent its time in opposition listening to the community. That's how we are able to put forward superior policy agendas, including our income tax package. Labor's approach on income tax is fairer and more responsible and takes a much more holistic view of the current circumstances of both the economy and the needs of Australians. We will deliver genuine tax relief for working Australians, protect those most vulnerable in our community and improve the budget bottom line.

Let me be very clear. Any crossbench senator who supports the government's tax package will bear responsibility for making our tax system less fair. They will be making life tougher for working-class Australians, putting on increased pressure and worsening inequality. The Australian people won't forget, and there will be a political price to pay at the next election for supporting this bill.

I heard the National Party. I heard Senator Williams scoff at our position. Here is a senator who looks after some of the poorest people in his electorate, and he is not prepared to give them a fair go. Senator Williams is out there supporting tax cuts for the banks, supporting tax cuts for big business and supporting tax cuts for the richest people in this country while ignoring the electorate of New England. The National Party are a disgrace. They are the lapdogs of the Liberal Party. They don't look after their own people, and they submit to the Liberal Party at every chance they get.